GLD ETF stock analysis: evening star candle points to a drop

Gold price hit $3,500 per ounce for the first time as investors seek safety from the persistent economic uncertainties. Since the start of the year, GLD gold ETF has rallied by about 27%; increasing by 11% since Trump’s tariffs took effect three weeks ago. 

Having entered the overbought zone and after forming a shooting star pattern, gold price appears due for a correction. That will have an impact on the GLD ETF, which tracks its movement.

IMF signals a drop in US and global output

President Trump’s aggressive trade policy has impacted the financial markets from different fronts. The resultant uncertainties have increased the demand for safe haven assets; sustaining GLD gold ETF above $300 for close to a week now.

In what he terms as apt measures to revive the US manufacturing sector, Trump has enacted a baseline tariff of 10% on almost all the US imports and an additional levy of 145% on Chinese goods shipped to the country.  

Additionally, the leader of the world’s top economy has introduced reciprocal tariffs on the country’s key trading partners including Japan, South Korea, the European Union, and Taiwan. However, he has paused on this group of levies until July to allow for bilateral trade agreements. China and Canada have since retaliated with certain trade barriers against the US while the EU has threatened to take similar measures.

With this turmoil, the International Monetary Fund (IMF) expects the country’s output to slow from last year’s 2.8% to 1.8% in 2025. Additionally, instability in the top economy is set to yield a decline in global output from 3.3% in 2024 to $2.8% in 2025.

Investors alarmed by Trump’s renewed attacks on the Fed

Economists and investors alike have been concerned that Trump’s trade policy will be inflationary and slow the country’s economic growth. Aware of this, the Federal Reserve led by Jerome Powell has been keen to tame inflation. While it has cooled significantly in recent years, it remains above the central bank’s target of 2%. 

Interestingly, Trump has come out guns blazing; calling on Powell to cut interest rates immediately. In a social media post on Monday, the president warned that the country’s economy may slow if the Fed does not move swiftly to lower rates. He stated, 

“There is virtually no inflation. But there can be a slowing of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW.” 

These latest remarks, coupled with his constant assertions that he can fire Powell before the end of his term, have investors concerned over the Fed’s independence. Doubts on the central bank’s credibility may lower confidence in the US dollar, further accelerating flows into safe havens like GLD gold ETF. 

On the positive side, Trump has mentioned that he was not considering firing him. That statement likely happened after he saw the stock and bond markets plunging because of these fears. 

GLD ETF technical analysis

The weekly chart shows that the GLD ETF has held steady in the past few years, moving from a low of $150 in 2023 to over $300 today. It has constantly remained above all moving averages, a sign that bulls are in control.

The risk, however, is that the fund has formed a shooting star candlestick pattern, pointing to a reversal in the coming days. This will happen as trade-related risks ease and Trump rules out firing Jay Powell.